Recently, significant declines have been observed in the value of Layer One protocols within the digital currency and blockchain sector. This trend stems from a shift in market behavior, where investors are now favoring “thick applications” over “thick protocols.” Although this transition has been underway for some time, the market has only recently begun to reflect it clearly in pricing. This indicates a reduced demand for smooth and uniform infrastructure and evolving investor expectations. Large public blockchain networks face increasing pressure to demonstrate real and sustainable revenue streams. Stablecoins have emerged as a potential solution, with assets like USDC and USDT exceeding $30 billion in value and being utilized across various Layer One and Layer Two networks. These stablecoins generate billions annually for issuers such as Circle and Tether, while network fees have reached several hundred million dollars in revenue. Many blockchain networks have started recognizing the necessity of internally capturing the financial benefits of stablecoins rather than continuously subsidizing issuers. This shift could improve platform financial models, making them more stable and sustainable. Such changes are likely to have profound effects on investment trends and protocol valuations within the blockchain industry. Overall, this development highlights the market’s increasing focus not just on core technology value but also on application and revenue models, potentially ushering in a new era for the blockchain sector.
Source: binance
